Contactless payment: Security and convenience in payment transactions

5 minutes reading time
Last updated:
November 4, 2024
Vivecca Frank
Vivecca Frank
A blonde woman holds her smartphone up to a mobile payment terminal and smiles

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Key Take-Aways

  • Speed and convenience: Contactless payment enables quick and easy transactions by presenting an NFC-enabled card or smartphone to a payment terminal – without entering a PIN or signature.
  • Security through NFC technology and tokenisation: NFC technology ensures secure communication over short distances, while tokenisation technology replaces the actual payment data with unique codes, minimising the risk of misuse.
  • Integration of Google Pay and Circula: With Google Pay and the Circula credit card, companies can offer their employees a convenient, secure and flexible solution. The cards can be easily integrated into Google Wallet and offer a seamless contactless payment option both in physical shops and online.

In an ever-evolving digital world, contactless payment has ushered in a groundbreaking change in payments. It allows consumers to make their purchases quickly and conveniently without the need for cash or physical card insertions. This payment system is based on Near Field Communication (NFC) technology, which allows transactions to be made wirelessly by simply holding an NFC-enabled device at a payment terminal. This blog post highlights how contactless payment works with physical cards and smartphones, with a particular focus on Google Pay™ as a prominent example.

What is contactless payment?

Before we focus on Google Pay and Google Wallet™, let's take a brief look at contactless payment in general. Contactless payment allows consumers to make purchases simply by presenting their credit, debit or other payment cards, or even their smartphone, to a contactless payment terminal. Instead of entering a PIN or providing a signature, the transaction is made quickly and securely through wireless communication between the payment terminal and the payment instrument.

NFC technology: the basis of contactless payment

NFC (Near Field Communication) technology is at the heart of contactless payment and enables fast and secure wireless communication between devices in close proximity to each other. NFC is a form of contactless data transmission that allows two NFC-enabled devices, such as a smartphone and a payment terminal, to communicate with each other simply by holding them within range. Unlike Bluetooth, NFC does not require time-consuming pairing steps and only works within a very tight radius of a few centimetres. This proximity makes NFC a secure method, as potential unauthorised access is made much more difficult.

Tokenisation technology, which is used in many contactless payment services such as Google Pay, ensures additional protection by replacing the actual payment information with unique codes. NFC not only plays a crucial role in the context of contactless payment, but also finds application in other areas, such as the wireless transmission of data, ticketing and the exchange of information between different electronic devices.

Contactless payment is also possible with a smartphone.

Options for contactless payment

Contactless payment is usually made by card or by smartphone or smartwatch.

1. Physical card

Payment cards with contactless NFC technology allow consumers to simply hold their card up to the reader to process the payment. Most modern debit, credit, current and prepaid cards are equipped with the necessary NFC technology. To make a payment by card, the cardholder simply needs to hold the card up to the contactless payment terminal. No PIN entry or signature is required, which speeds up the process considerably compared to conventional card payments.

2. Smartphone or smartwatch

With the introduction of services such as Google Pay and Apple Pay, you can store their payment cards in digital form on your smartphone or smartwatch and pay by simply holding the phone out. This provides added convenience and allows you to manage multiple payment cards in a single app.

Example: Contactless payment with Google Pay and Google Wallet

What is Google Pay?

Google Pay is Google's digital payment system, which also includes Google Wallet. Here you can securely store your payment cards on your smartphone and make contactless payments. The app is designed to enable seamless transactions both in physical shops and online.

Look out for these icons to find acceptance points for Google Pay:

Google Pay acceptance points use these symbols.

Functionality and supported devices

The way Google Pay works is simple: users add their payment cards to the app and can then pay at contactless payment terminals by holding their smartphone close to the terminal. Google Wallet is usable on Android devices with at least Android 7.0.

Google Pay security

Security is an essential aspect of contactless payment. Google Pay employs various security measures to protect the privacy and data of its users. These include the use of tokenisation, which does not transmit actual card information, and the ability to authorise payment methods via fingerprint or facial recognition.

Advantages and disadvantages of Google Pay and contactless payment

Advantages

  • Fast and convenient transactions
  • Low risk of card misuse through tokenisation
  • Support for multiple payment cards in one app

Disadvantages  

  • Limited acceptance at some shops and locations
  • Dependence on smartphone battery life

Steps to set up Google Pay

Setting up Google Pay on a smartphone is straightforward and requires adding payment cards and verifying identity. The app guides users through the entire process. Learn how to use Google Pay with your Circula credit card in our Help Center. You can also use virtual credit cards for this purpose.

The Circula credit card in Google Wallet.  

Sources

Disclaimer

We would like to point out that the contents of our website (including any legal articles) are for information purposes only and do not constitute legal advice in the strict sense. The content of this information cannot and should not replace individual and binding legal advice that addresses your specific situation. In this respect, all information provided is without guarantee of accuracy, completeness and topicality.

Vivecca Frank
Vivecca Frank

Frequently asked questions about contactless payment

FAQs

What is contactless payment and how does it work?

Contactless payment allows consumers to make purchases quickly and conveniently by presenting an NFC-enabled card or smartphone to an appropriate payment terminal. NFC (Near Field Communication) technology allows wireless communication between the payment terminal and the means of payment in the immediate vicinity of a few centimetres. Payment is made without entering a PIN or signature, which speeds up the process considerably.

Which cards support contactless payment?

Most modern debit, credit, current and prepaid cards are equipped with NFC technology to enable contactless payments. These include cards from leading credit card providers such as VISA, Mastercard - and also the Circula credit card.

How secure is contactless payment?

Contactless payment is considered secure because NFC technology has a very short range and the card or smartphone must be held in close proximity to the payment terminal. The tokenisation technology used in many contactless payment services replaces the actual payment information with unique codes, minimising the risk of card misuse. In addition, many banks offer insurance cover against fraudulent transactions.

What is the difference between contactless payment by card and by smartphone?

Contactless payment by card and by smartphone is based on the same NFC technology, but the physical card is held directly against the payment terminal, while the smartphone requires a corresponding app such as Google Pay to make payments. Smartphones offer the advantage that multiple payment cards can be stored in a single app.

What are the advantages of contactless payment?

Contactless payment offers a wide range of benefits, including speed, convenience and security. Payment is made simply by holding out the card or smartphone, with no PIN entry or signature required. Security is enhanced by the short range of NFC technology and tokenisation technology.

Where can I make contactless payments?

The acceptance of contactless payment has increased strongly in recent years. Nowadays, contactless payment terminals can be found at many shops, supermarkets, restaurants, petrol stations and public transport. Most places that accept cards as a means of payment also offer the option of contactless payment.

Are there any restrictions on contactless payments?

Yes, there is often a maximum transaction limit for contactless payments to limit the risk of unwanted payments. This limit varies depending on the bank or card issuer and can usually be exceeded by entering the PIN if a higher payment amount is required.

How can I set up Google Pay on my smartphone?

Setting up Google Pay is simple. First, the Google Wallet app must be downloaded from the Google Play Store. Then payment cards can be added by manually entering the card information or using the smartphone's camera to automatically scan the card. The cards must then be verified by the bank or card issuer before they can be used in the app. Learn how to use Google Pay with your Circula credit card here.

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